Dr. Doom calls cryptocurrency a scam - Cryptonews

Economist Nouriel Roubini, also known as Dr. Doom because of his overly pessimistic views on financial outcomes, took aim at cryptocurrencies yesterday, labelling 90% of them as a scam.
With all that’s going on in the cypto world, from exchange crashes to masive fraud cases, it would be easy to buy into that idea. After all, cryptocurrency lacks something we humans value greatly – tangibility. Put simply, we’ve got nothing to hold in our hands. Cash is good. Gold is good. We can hold it, put it in vaults and wallets, and the more we have of it, the bigger the pile the is and the more it weighs. That makes sense in our caveman brains.
But crypto doesn’t work like that. It’s simply numbers on a screen. And yes, nowadays as we move closer to a cashless society traditional currencies are also becoming just numbers on a screen that we move around with apps and charge cards too, but we know at the back of our minds we could walk into our bank and they could give us all that money in a nice, big heavy pile of cash, and our caveman brain would be happy.
So is he right? Is this all just a big Ponzi scheme, devised by a brilliant mind who immediately vanished and left us to throw our money at this idea hoping to get more back than we put in?
Are there truly whales? Huge investors who suddenly appear, pump vast sums into a cryptocurrency then disappear from view again? Are people like Michael Saylor just today’s version of PT Barnum, stirring us all up to believe in this creation which in turn raises the value of his holdings but leaves the rest of us empty handed?
One thing Roubini does have right is that there are certainly people out there using cryptocurrency as a means to steal other people’s money. But that has been true for all money ever since money became an established concept in society. What is true nowadays is that we live in a much more connected society, where news breaks fast and wide, and stories of deception and wrongdoing are ‘exciting’ to read. For that reason we hear a great deal about crypto scams, and as the media needs readers, it pushes such stories to keep us coming back. In turn this gives us the impression that the cryptoworld is a cesspool of fraud, scams and people generally out to get us.
The information coming out around the FTX exchange and its demise only serves to fuel this fire. Tales of expensive holidays, private jets, and billions in misappropriated funds could be enough to make even the most hardend crypto-fan reconsider where to put their money. And yes, the few people at the top of the FTX empire almost certainly were not acting with the care and consideration its investors would have hoped they would do, and hopefully all those affected will receive at least some compensation from the insolvency.
If I look at Coinmarketcap.com today, 19 January, I see that the cryptoworld has a global market cap of $963.5 billion. That is an immense figure by anyone’s standards – larger than the GDP of Turkey, the Netherlands, Saudi Arabia or Switzerland. And it has made countless millionaires in its time, whose cars, homes and lifestyles are real and tangible. Granted they were in the right place at the right time, but again that is true of all investments.
A better framing of Roubini’s comments would be that which applies to investors in all assets – caveat emptor – or Let The Buyer Beware. During Bitcoin’s meteoric rise it seemed like the gold rush of the 19th century. The message being put out was invest anything and everything you can because we’re all going to be rich. And just like the gold rush, or the oil boom, or the dot com bubble, in the end it found its balance and normality returned. Now, whether the $20k mark for Bitcoin is normality remains to be seen, but what we can say is that investing is a long-term thing. If you bought your Bitcoins in 2009 you’ve had the rollercoaster of your life, but your investment is still worth more now than then. If you had invested in the US30, the index of the 30 top US companies, in 2009 you would have enjoyed a similar ride, but again, your investment would be worth a lot more now than then.
There will always be nay-sayers, especially about new concepts, because that’s human nature. The Internet was branded as a fad in its early days, as were CDs, cars, even washing machines. What is true for all aspects of life is true for crypto, too: use your common sense. If something seems to good to be true, it invariably is. Invest prudently, cautiously, and with full knowledge of what you are getting into.
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